Moody's downgrades AmeriQual

Moody's Investors Service said it downgraded AmeriQual Group, LLC's corporate family and probability-of-default ratings to B3 from B1 and senior secured second-lien notes to Caa1 (LGD4, 62%) from B2 (LGD4, 63%). Moody's also affirmed the SGL-3 speculative grade liquidity rating.

The outlook remains negative.

Moody's said the downgrades reflect the weakened credit profile because of meaningfully lower shipments of meals to the U.S. Military, AmeriQual's largest customer. The agency said it also believes that order volumes are likely to remain constrained over at least the near term.

The B3 corporate family rating reflects the company's small size, high reliance on two customers and highly levered capital structure, according to the agency.

If order volumes continue to decline, the company's debt-to-EBITDA ratio could weaken from the 6.7 times at Sept. 30, the agency said.

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